Masonry Magazine June 1972 Page. 17
TAXES
By MIRIAM McD. MILLER
WITHHOLDING
The IRS has put out a reminder to employees to check their withholding allowances so that they are certain that the proper amount of money is being withheld this year.
This is an attempt by the IRS to bring into proper balance what its withholding tables have not done. In 1971, many taxpayers did not have a sufficient amount of tax withheld. When the tables were adjusted to avoid a repetition of this the result was not totally satisfactory. In many cases, the new tables are now causing an over-withholding.
According to available information, it is not necessary (with the new tables) to claim fewer exemptions than you are entitled to claim. The IRS has particularly advised 1) single persons who hold no more than one job at a time during the year and 2) married persons who work at no more than one job at a time during the year and whose spouses are not employed to check their current withholdings.
This is certainly the time to check. By noting the actual tax you paid on 1971 income, you can find out if the amount being withheld is going to be for approximately the same amount of tax. If this is so, then you would not want to change your withholding. But, if not, you may want to file a new withholding certificate Form W-4.
PENSION PLAN STUDY
If you are either a participant in a private welfare or pension plan or you are contemplating setting one up, you may want to write for a copy of the year-long study made by the Senate Labor Subcommittee of these pension plans. The report pointed out that a definite need exists to protect plan participants by the federal government. It was recommended that laws be enacted immediately that would establish minimum standards of vesting, systematic requirements for funding of pension plans, a uniform federal standard of fiduciary responsibility, improved disclosure and communication of plan provisions to workers, and guidelines to develop reciprocity among private pension plans.
One major recommendation was for centralization in one government agency to oversee and regulate all private pension plans. Another area considered by the study to be in most urgent need of government protection is that of the right to vested benefits under private plans. To cover unfunded vested benefits, a program of plan termination has been recommended. All in all, the report makes clear that this is an area into which the government is going to have to move.
STANDARD DEDUCTION
Every year more and more taxpayers are not itemizing their deductions but are merely taking the standard deduction. For 1972, the percentage standard deduction goes up to 15% of adjusted gross income, with a maximum allowable deduction of $2000. The low-income allowance increases to a flat $1300.
masonry
June, 1972
POLITICS AND TAXES
As a result of the Revenue Act of 1971, we not only will have a tax credit or a deduction for contributions to political campaigns, but, we will also have a tax check-off. Under this system, an individual may designate (probably right on his Form 1040) that $1 of his tax bill be paid over to a presidential election campaign fund for use by the presidential candidates or political parties of his choice. However, if he so designates, his tax check-off may be for a general fund that will be shared by all eligible candidates. In the case of a joint return, each spouse will be entitled to make the $1 designation.
NATIONAL HOUSING ACT
The IRS has just indicated that at least for the present it will add a tax break to the benefits received under the National Housing Act. Under the terms of this Act, low-income families are aided in buying homes. The Department of Housing and Urban Development (HUD) makes assistance payments to mortgage lenders on behalf of certain homeowners.
The question then came up that since these payments benefited the homeowners financially, did these payments become income to the homeowners and need income tax be paid on them? Another question that arose was since the homeowner did not pay all of the amount that went to pay the interest on the mortgage and the taxes on the property, could he deduct on his income tax return the total mortgage interest and real estate taxes paid on the residence?
The IRS is studying the problems involved. However, in the meantime, the IRS has taken the position that the person on whose behalf the payments are made does not receive income because of the payments from HUD. Further, the homeowner can deduct the total mortgage interest and real estate taxes paid on the residence, including the interest and taxes that may have been satisfied by the assistance payments.
PIGGYBACK PLAN
The House Ways and Means Committee has finished with its work on what has come to be called the piggyback collection plan, which would provide for a combined collection of federal and state income taxes by the IRS.
Should this plan become law, then taxpayers would file both the federal income tax return and a simplified state income tax return with the IRS at the same time. States would be sent the income taxes due them. The IRS would be responsible for withholding of state income taxes, would perform all income tax audits of state returns, and would handle the collection and enforcement. It is believed that should this plan be adopted it would save state governments millions of dollars in administrative costs.
MEDICAL REIMBURSEMENT PLANS
Medical reimbursement plans remain active in employer-related tax matters being reported these days. And, with
(Please turn page)
17